Top tips to increase your chances of securing a mortgage
Getting a mortgage can be stressful and worrying.
It’s not a complicated process, however, something as simple as not remembering to register to vote can bring the entire process to a halt. You could be left wondering why you were refused a mortgage when you seem to be such a safe bet for your bank!
It starts with the right mortgage provider
Each mortgage provider differs slightly in how they make lending decisions, but all will consider your deposit, income and employment status, credit history, outgoings and debts.
Credit report
Go online and take a look at your credit report and make sure all payments, past and present are on time. From your mobile phone contract to car finance, credit cards, overdrafts and any other borrowings. Then check your credit score, if you have always paid on time and your credit score is low, find out why.
Make sure you are on the electoral role
This takes two minutes to do online and without it you will not get a mortgage.
Balance your borrowing and available credit
If you have a credit card, with a high limit, even if you do not use it, this can dissuade a potential lender from offering you a mortgage because of the potential to run up a lot of debt. Yet it’s also worth remembering not to lower your limit to the balance as this looks like you have used all available credit.
Equally as important is to have some credit history to show your lender you can pay back debt. As a general rule, the less debts you have – the less outgoings you have, meaning you can borrow more.
Streamline accounts
The longer you have banked with your bank the better so don’t close or switch accounts. However, if you have several accounts, you do not use, shut them down. You don’t want the risk of fraud ruining your chances.
Don’t apply for credit
If you are applying for a mortgage ideally avoid applying for any other credit beforehand. If you get refused this will show on your credit report.
Take a look at your spending
Your lender typically will want to see your last three bank statements so beforehand look at your spending and reduce it where you can.
Gather your paperwork
Your most recent payslips and bank statements for the past three months, proof of deposit, ID –passport, and proof of address.
Mortgage calculator
At any point you can go online and get a reasonably accurate idea of how much you could borrow using one of the high street bank’s mortgage calculators.
Agreement in principle
An agreement in principle, allows you to see if a potential mortgage provider will lend to you and is a soft search of your credit history. You do not necessarily have to be in a position to buy to get an agreement in principle, although to process your application further following the steps above will help secure a mortgage successfully.
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This article was originally published by BriefYourMarket and is reproduced here with their permission.
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